An investigation into "prolonged customer service failings" at Npower is to be launched, energy regulator Ofgem has announced.

Under the watchdog's new powers to enforce fair treatment of consumers, Npower now faces a financial penalty or redress payment it is found to have broken the rules.

Earlier this month Npower said it would no longer send bills to customers who left it more than six months ago if the company itself was to blame for the delay.

The move followed reports of households switching away from Npower only to receive bills months, and in some cases over a year, later.

One former customer tweeted MoneySavingExpert.com saying they left Npower last June and only recently received a bill for more than £1,000, while another said they had received a £350 bill 16 months after they left.

It is a billing fiasco stretching back a year. You might think not getting a bill would be good news - but late billing has left Npower customers not knowing how much they owe, then getting big and unexpected bills.

I'm told 414,000 accounts have been affected. Now Ofgem are using new powers to threaten a £356 million fine and a ban on outbound telesales calls if the company fails to get this mess sorted out by the end of August.

I spoke to Npower this lunchtime, it says the problems will be resolved and no customer will be left out of pocket as a result of these billing failures.

Mind you, they said that in December - now I'm told they have put extra resources in and are committed to a solution.

The chief executive of RWE npower has welcomed the major competition inquiry into energy firms and said it is "time that the realities of the market were made public."

It's time that the realities of the energy market were made public. Britain has the 3rd cheapest gas prices in Europe and the 7th cheapest electricity prices, and we have taken steps to get to the facts as to why bills are going up.

If there are problems they need to be dealt with, and where the market is operating well this can be acknowledged.

– Paul Massara, CEO RWE npower

Mr Massara added that British consumers deserved a "comprehensive and vigorous investigation" so the public could start trusting energy companies again.

The chief executive of npower earlier claimed gas and electricity prices were rising because British houses waste so much energy.

Npower chief executive Paul Massara has said bills are high 'because British houses waste so much energy'. Credit: PA Wire

"The reason why UK energy bills are high is both that the housing stock is not energy efficient but also that suppliers have kept whacking up prices year after year," Mark Todd, co-founder of switching website energyhelpline.com, said.

"Suppliers have raised prices by 140% in the last nine years while users have cut usage. Typical gas usage is down 34% and electricity consumption by 3% and this is in part because many customers can no longer afford to heat their homes.

"The biggest reason for customers cutting usage is unaffordability so without doubt UK homes are now colder than they were in the past. It's crunch time for the energy market and suppliers can't just blame the houses."